The Boiler Room is a great place to reward your folks with some fun. It’s also an ideal place to get serious and explore issues related to team and organizational development. By temporarily shedding job titles and real world responsibilities, your people can interact freely and fully engage to achieve group goals.
All of our offerings focus on enhancing the relational skills needed for positive and productive human interaction and goal achievement. We'll help you examine and talk about human systems objectively and break through to new understandings about human interaction within your group or organization.
We offer learning 'events' that include climbing the walls at The Boiler Room, as well as non-climbing experiential challenges. We also offer training courses and experiential events at the venue of your choice.
Whether you're looking for a light social activity or educational opportunities, The Boiler Room has a lot to offer...
About Breakthrough Associates Inc and The Boiler Room Climbing Gym…
Benefits of Experiential Learning…
Organizational Development…
Social Activities, Just for Fun…
Group Discounts, Program Costs, Booking Procedures…
Showing posts with label shaw capital management investment. Show all posts
Showing posts with label shaw capital management investment. Show all posts
Thursday, July 14, 2011
Shaw Capital Management Warning Tips | Shaw Capital Management Profile Reviews
Shaw Capital Management Warning Tips
Looking for a loan or credit card but don't think you'll qualify? Turned down by a bank because of your poor credit history?
You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation's consumer protection agency, that could be a tip-off to a rip-off. If you're asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you're dealing with a scam artist. More than likely, you'll get an application, or a stored value or debit card, instead of the loan or credit card.
The FTC says some red flags can tip you off to scam artists' tricks. For example:
* A lender who isn't interested in your credit history. A lender may offer loans or credit cards for many purposes - for example, so a borrower can start a business or consolidate bill payments. But one who doesn't care about your credit record should give you cause for concern. Ads that say "Bad credit? No problem" or "We don't care about your past. You deserve a loan" or "Get money fast" or even "No hassle - guaranteed" often indicate a scam.
* Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit - even to creditworthy consumers.
* Fees that are not disclosed clearly or prominently. Scam lenders may say you've been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you're told it's for "insurance," "processing," or just "paperwork."
Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.
It's also a warning sign if a lender says they won't check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they're hiding.
* A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
* A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company's phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
* A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General's office or your state's Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
A lender who asks you to wire money or pay an individual. Don't make a payment for a loan or credit card directly to an individual; legitimate lenders don't ask anyone to do that. In addition, don't use a wire transfer service or send money orders for a loan. You have little recourse if there's a problem with a wire transaction, and legitimate lenders don't pressure their customers to wire funds.
Finally, just because you've received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don't assume it's a good deal - or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it's really important to do your homework.
Shaw Capital Management and Financing - Advance-Fee Loan Scams: Finding Low-Cost Help for Credit Problems
If you have debt problems, try to solve them with your creditors as soon as you realize you won't be able to make your payments. If you can't resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.
Looking for a loan or credit card but don't think you'll qualify? Turned down by a bank because of your poor credit history?
You may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history. The catch comes when you apply for the loan or credit card and find out you have to pay a fee in advance. According to the Federal Trade Commission (FTC), the nation's consumer protection agency, that could be a tip-off to a rip-off. If you're asked to pay a fee for the promise of a loan or credit card, you can count on the fact that you're dealing with a scam artist. More than likely, you'll get an application, or a stored value or debit card, instead of the loan or credit card.
The FTC says some red flags can tip you off to scam artists' tricks. For example:
* A lender who isn't interested in your credit history. A lender may offer loans or credit cards for many purposes - for example, so a borrower can start a business or consolidate bill payments. But one who doesn't care about your credit record should give you cause for concern. Ads that say "Bad credit? No problem" or "We don't care about your past. You deserve a loan" or "Get money fast" or even "No hassle - guaranteed" often indicate a scam.
* Banks and other legitimate lenders generally evaluate creditworthiness and confirm the information in an application before they guarantee firm offers of credit - even to creditworthy consumers.
* Fees that are not disclosed clearly or prominently. Scam lenders may say you've been approved for a loan, then call or email demanding a fee before you can get the money. Any up-front fee that the lender wants to collect before granting the loan is a cue to walk away, especially if you're told it's for "insurance," "processing," or just "paperwork."
Legitimate lenders often charge application, appraisal, or credit report fees. The differences? They disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.
It's also a warning sign if a lender says they won't check your credit history, yet asks for your personal information, such as your Social Security number or bank account number. They may use your information to debit your bank account to pay a fee they're hiding.
* A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they deliver.
* A lender who uses a copy-cat or wanna-be name. Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick. Some scam artists have pretended to be the Better Business Bureau or another reputable organization, and some even produce forged paperwork or pay people to pretend to be references. Always get a company's phone number from the phone book or directory assistance, and call to check they are who they say they are. Get a physical address, too: a company that advertises a PO Box as its address is one to check out with the appropriate authorities.
* A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. To check registration, call your state Attorney General's office or your state's Department of Banking or Financial Regulation. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
A lender who asks you to wire money or pay an individual. Don't make a payment for a loan or credit card directly to an individual; legitimate lenders don't ask anyone to do that. In addition, don't use a wire transfer service or send money orders for a loan. You have little recourse if there's a problem with a wire transaction, and legitimate lenders don't pressure their customers to wire funds.
Finally, just because you've received a slick promotion, seen an ad for a loan in a prominent place in your neighborhood or in your newspaper, on television or on the Internet, or heard one on the radio, don't assume it's a good deal - or even legitimate. Scam artists like to operate on the premise of legitimacy by association, so it's really important to do your homework.
Shaw Capital Management and Financing - Advance-Fee Loan Scams: Finding Low-Cost Help for Credit Problems
If you have debt problems, try to solve them with your creditors as soon as you realize you won't be able to make your payments. If you can't resolve the problems yourself or need help to do it, you may want to contact a credit counseling service. Nonprofit organizations in every state counsel and educate people and families on debt problems, budgeting, and using credit wisely. Often, these services are low- or no-cost. Universities, military bases, credit unions, and housing authorities also may offer low- or no-cost credit counseling programs. To learn more about dealing with debt, including how to select a credit counseling service, visit ftc.gov/credit.
Tuesday, July 12, 2011
South Carolina Increases Investments In Avenue, D.E. Shaw
Jul 8 2011 | 11:25am ET
South Carolina's main public pension plan has boosted its commitments to two hedge fund managers by a total of $550 million.
The $26 billion South Carolina Retirement System Investment Commission has doubled its allocation to Avenue Capital Management, Pensions & Investments reports. The New York-based hedge fund will now manage $500 million for the pension.
In addition, South Carolina combined two existing commitments to D.E. Shaw Group that totaled $450 million and added another $300 million.
The pension has also extended the term of its investment consultant by one year; NEPC's contract will now expire at the end of June 2012. Chief Operating Officer Robert Feinstein said that South Carolina is still mulling whether to issue a request for proposals for a new consultant.
South Carolina's main public pension plan has boosted its commitments to two hedge fund managers by a total of $550 million.
The $26 billion South Carolina Retirement System Investment Commission has doubled its allocation to Avenue Capital Management, Pensions & Investments reports. The New York-based hedge fund will now manage $500 million for the pension.
In addition, South Carolina combined two existing commitments to D.E. Shaw Group that totaled $450 million and added another $300 million.
The pension has also extended the term of its investment consultant by one year; NEPC's contract will now expire at the end of June 2012. Chief Operating Officer Robert Feinstein said that South Carolina is still mulling whether to issue a request for proposals for a new consultant.
Shaw Capital Management for Small Business Financing with Factoring
Online PR News – 28-June-2011 –Financing a small business has always been challenging. Read this article to find out if factoring financing is the right solution for your small business. Learn from experts, refrain from internet offer scams and fraud.
shaw capital management and Financing provide same-day-funding. We can help you meet your cashflow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full.
Small business owners have always had a tough time obtaining financing. Simply, most small businesses just can’t qualify for conventional business loans. The requirements are too onerous – the company must have sizable assets, multiple years of profitability and many times, it’s financial statements must be audited by a 3rd party.
Most business owners consider that a business loan is their only business financing alternative. When they get turned away, they give up any hope of obtaining financing. What most small business owners don’t know is that they do have alternatives – and – many times those alternatives can work better that conventional financing.
Let’s take a common cash flow challenge. Companies that sell products or services to other businesses usually have to wait between 30 and 60 days to get paid for their services. So, they incur the expenses of delivery immediately, but then wait a long time to recoup their investment. While this is fine for companies with adequate banking reserves, it is one of the major challenges that business owners face today. As a matter of fact, few startups plan for the fact that it takes 4 to 8 weeks to get paid, which not only limits their growth opportunities, but challenges their very survival as a business.
Now, most business owners would consider that the only solution to the previous problem is to get a loan or a line of credit. But there is another option – it’s called factoring financing. Few people have heard of it, so not many owners consider it if they fail to get a business loan.
Invoice factoring offers a very simple solution to the slow payments problem. Let’s say that you sold $10,000 worth of consulting services to a company. And let’s say that they’ll pay the $10,000 in about 45 days, which is the industry average. Now, what happens if you can’t wait because you need to meet payroll or make supplier payments? Well, you could sell the invoice to a factoring company. The factoring company would buy it from you in two installments. The first installment would be for 80% of the invoice, or $8000 in the case of our example. This is paid at invoicing.
The second installment, paid to you when your client actually pays the invoice, is the remaining 20%, less a fee. Using our example, it’d be $2000 minus the cost of the factoring service.
So factoring invoices offers you the following proposition: an immediate advance of about 80% at time of invoicing, and a second advance for the reminder (less fees) at the time of actual payment.
As you can see, factoring provides the needed working capital to meet business expenses without worrying about when your client will pay. It provides you with predictable cash flow, positioning your business for growth. And qualifying for factoring tends to be relatively easy. The biggest requirement (though not the only one) is that you must have a good roster of clients. By Marco Terry
shaw capital management and Financing provide same-day-funding. We can help you meet your cashflow needs immediately without entering into a long term factoring relationship. The money you get for the freight bills we purchase is payment in full.
Small business owners have always had a tough time obtaining financing. Simply, most small businesses just can’t qualify for conventional business loans. The requirements are too onerous – the company must have sizable assets, multiple years of profitability and many times, it’s financial statements must be audited by a 3rd party.
Most business owners consider that a business loan is their only business financing alternative. When they get turned away, they give up any hope of obtaining financing. What most small business owners don’t know is that they do have alternatives – and – many times those alternatives can work better that conventional financing.
Let’s take a common cash flow challenge. Companies that sell products or services to other businesses usually have to wait between 30 and 60 days to get paid for their services. So, they incur the expenses of delivery immediately, but then wait a long time to recoup their investment. While this is fine for companies with adequate banking reserves, it is one of the major challenges that business owners face today. As a matter of fact, few startups plan for the fact that it takes 4 to 8 weeks to get paid, which not only limits their growth opportunities, but challenges their very survival as a business.
Now, most business owners would consider that the only solution to the previous problem is to get a loan or a line of credit. But there is another option – it’s called factoring financing. Few people have heard of it, so not many owners consider it if they fail to get a business loan.
Invoice factoring offers a very simple solution to the slow payments problem. Let’s say that you sold $10,000 worth of consulting services to a company. And let’s say that they’ll pay the $10,000 in about 45 days, which is the industry average. Now, what happens if you can’t wait because you need to meet payroll or make supplier payments? Well, you could sell the invoice to a factoring company. The factoring company would buy it from you in two installments. The first installment would be for 80% of the invoice, or $8000 in the case of our example. This is paid at invoicing.
The second installment, paid to you when your client actually pays the invoice, is the remaining 20%, less a fee. Using our example, it’d be $2000 minus the cost of the factoring service.
So factoring invoices offers you the following proposition: an immediate advance of about 80% at time of invoicing, and a second advance for the reminder (less fees) at the time of actual payment.
As you can see, factoring provides the needed working capital to meet business expenses without worrying about when your client will pay. It provides you with predictable cash flow, positioning your business for growth. And qualifying for factoring tends to be relatively easy. The biggest requirement (though not the only one) is that you must have a good roster of clients. By Marco Terry
Shaw Capital Management: Accounts Receivable Financing
What is Accounts Receivable Financing?
Receivable financing is a method used by businesses to convert sales on credit terms for immediate cash flow. Financing accounts receivable has become the preferred financial tool in obtaining flexible working capital for businesses of all sizes. The receivable credit line is determined by the financial strength of the customer (Buyer), not the client (The seller of the receivables).
Shaw Capital Management financing programs can accommodate companies with seasonal or uneven sales patterns or start-up operations with no financial base to rely upon. Any business can qualify for receivable financing if it generates sales on open credit terms to customers with financial credit strength.
Business must sell to a good credit worthy account debtor (customer), a receivable or invoice that can be verified or has an acceptance (signed off) by the account debtor. Receivable financing is available to all industries that provide services, or deliver products to commercial accounts.
At Shaw Capital Management - providing a fast, simple and affordable solution to bridge the gap between billing and collections ...
Receivable financing is a method used by businesses to convert sales on credit terms for immediate cash flow. Financing accounts receivable has become the preferred financial tool in obtaining flexible working capital for businesses of all sizes. The receivable credit line is determined by the financial strength of the customer (Buyer), not the client (The seller of the receivables).
Shaw Capital Management financing programs can accommodate companies with seasonal or uneven sales patterns or start-up operations with no financial base to rely upon. Any business can qualify for receivable financing if it generates sales on open credit terms to customers with financial credit strength.
Business must sell to a good credit worthy account debtor (customer), a receivable or invoice that can be verified or has an acceptance (signed off) by the account debtor. Receivable financing is available to all industries that provide services, or deliver products to commercial accounts.
At Shaw Capital Management - providing a fast, simple and affordable solution to bridge the gap between billing and collections ...
Tuesday, July 5, 2011
Bell heads for the HST boiler room
Posted by Tom Fletcher
MAY
3
He can sell lumber to China, but can he sell the HST to British Columbia? Folks around the province are about to find out, as Jobs, Tourism and Innovation Minister Pat Bell comes off the bench to join Finance Minister Kevin Falcon and Transportation Minister Blair Lekstrom in the hosting of telephone town halls on the HST.
The finance ministry has just announced a new schedule for the remaining town halls. They’re doing them three regions at a time, after being forced to juggle the schedule to avoid Vancouver Canucks playoff games. Here’s the new schedule, with robo-callers ready to start ringing every listed home phone in each region to invite them to take part.
Wednesday, May 4
* 6:30 p.m. MDT (5:30 p.m. PDT) – Kootenay
* 7:00 p.m. – Burnaby, Port Coquitlam, New Westminster, Coquitlam
* 7:30 p.m. – Interior and North Coast
Tuesday, May 10
* 6:30 p.m. – Okanagan
* 7:00 p.m. – Fraser valley
* 7:30 p.m. – Mid-Island, North Island and Southern Coast
Thursday, May 12
* 5:30 p.m. – Richmond, South Delta and North Shore
* 6:00 p.m. – Victoria
* 6:30 p.m. – Vancouver
MAY
3
He can sell lumber to China, but can he sell the HST to British Columbia? Folks around the province are about to find out, as Jobs, Tourism and Innovation Minister Pat Bell comes off the bench to join Finance Minister Kevin Falcon and Transportation Minister Blair Lekstrom in the hosting of telephone town halls on the HST.
The finance ministry has just announced a new schedule for the remaining town halls. They’re doing them three regions at a time, after being forced to juggle the schedule to avoid Vancouver Canucks playoff games. Here’s the new schedule, with robo-callers ready to start ringing every listed home phone in each region to invite them to take part.
Wednesday, May 4
* 6:30 p.m. MDT (5:30 p.m. PDT) – Kootenay
* 7:00 p.m. – Burnaby, Port Coquitlam, New Westminster, Coquitlam
* 7:30 p.m. – Interior and North Coast
Tuesday, May 10
* 6:30 p.m. – Okanagan
* 7:00 p.m. – Fraser valley
* 7:30 p.m. – Mid-Island, North Island and Southern Coast
Thursday, May 12
* 5:30 p.m. – Richmond, South Delta and North Shore
* 6:00 p.m. – Victoria
* 6:30 p.m. – Vancouver
Shaw Capital Management Factoring:Freight Bill Factoring – Right or Warning for Your Business
http://shaw-capitalmanagement.com
submitted by: shawcapitalman
Shaw Capital Factoring and Management of Loans Freight Bill factoring Tips - One of the most difficult aspects of managing a trucking company – especially a small trucking company – is the cash flow. Cash flow is all about how money moves through your company. Unfortunately, when you have clients that pay 30 to 60 days after you have shipped for them, the cash flow can become a little strained. This is because, even though your customers have not paid yet, you still have daily expenses: truck maintenance, pay checks to personnel, fuel costs and more. So how do you cover these expenses when you do not have the ready capital to hand? One solution can be freight bill factoring.
Freight bill factoring v. traditional loan financing
Shaw Capital Management and Factoring, Right or Warning for Your Business - If you are a small trucking company (and maybe even a medium sized or large one), you know that sometimes it can be tough to get traditional loan financing. Often, especially if you are start up, or if you are going through a rapid period of expansion, you just do not have the available credit for traditional loan financing – and you still have the need for cash.
In such cases, freight bill factoring can help you obtain the capital you need. In freight bill factoring, a financing company – called a factor – basically buys the freight bill from you and advances you the cash. Often, the factor will in turn collect from the customer, meaning that once you turn the invoice over, it is also no longer something you need to worry about.
Basics of freight bill factoring - Freight Bill Factoring – Right or Warning for Your Business
Even thought there is not the same approval process that you would have to go through with the bank, the factor will still want to make sure that payment from your customers is likely. Your customer list may be scrutinized, and those that pass muster can provide the freight bills for factoring. It is possible to set up a regular arrangement with the factor so that cash flow remains regular. Here are some of the things you need to keep in mind about freight bill factoring:
Documentation. Proper documentation will be needed when you present a freight bill for factoring. You will need an original bill of lading, as well as other documents that the factor may request.
Fees. Be aware that you will be charge a fee for the advance. This is typically between three percent and five percent of the total. The fee depends on how reliable your customers are, and sometimes can depend on how quickly they pay their invoices.
Reserve. Sometimes, a factor will hold a reserve from the advance on the invoice. In such cases, many of them will pay between 85 and 90 percent of the freight bill up front. This is the advance. The rest is held in reserve, just in case the invoice is not paid, or if other fees need to be collected. When the invoice is paid, the rest of the freight bill (minus the fee) is paid. For example, if you have a bill for $1,000, the company may only advance you $900 on the spot. (Remember, though, this is better than the $0 you be getting otherwise.) If the fee is three percent of the total, $30 would be subtracted from the remaining $100 when the customer pays the invoice, leaving you with an additional $70.
Recourse v. non-recourse. It is very important to determine whether or not the factor you are working with offers recourse or a non-recourse agreement. This is because it can make a very big difference in the rights the factor has in collecting on an invoice that is not paid. In a recourse agreement, the factor can require this article has all rights reserved and is copyright by 100 Best you to pay some or all of a freight bill if the customer does not pay. In a non-recourse factoring agreement, once freight bill is turned over to the factor, it is solely the factor’s responsibility. You are in the clear if the customer does not pay – you can keep your money (although you may not get the reserve back).
Getting your money from the factor. You need to find out how the factor will pay your advance. With freight bill factoring, the most common methods are wire transfer, ACH transfer and check. It is important to note that the funds may not be available for immediate withdrawal from your account. In same cases it may take 24 to 48 hours for the money to become available to you.
Freight bill factoring can be very beneficial to trucking companies. It allows you almost immediate access to capital, and can keep the cash flow in your company more liquid.
submitted by: shawcapitalman
Shaw Capital Factoring and Management of Loans Freight Bill factoring Tips - One of the most difficult aspects of managing a trucking company – especially a small trucking company – is the cash flow. Cash flow is all about how money moves through your company. Unfortunately, when you have clients that pay 30 to 60 days after you have shipped for them, the cash flow can become a little strained. This is because, even though your customers have not paid yet, you still have daily expenses: truck maintenance, pay checks to personnel, fuel costs and more. So how do you cover these expenses when you do not have the ready capital to hand? One solution can be freight bill factoring.
Freight bill factoring v. traditional loan financing
Shaw Capital Management and Factoring, Right or Warning for Your Business - If you are a small trucking company (and maybe even a medium sized or large one), you know that sometimes it can be tough to get traditional loan financing. Often, especially if you are start up, or if you are going through a rapid period of expansion, you just do not have the available credit for traditional loan financing – and you still have the need for cash.
In such cases, freight bill factoring can help you obtain the capital you need. In freight bill factoring, a financing company – called a factor – basically buys the freight bill from you and advances you the cash. Often, the factor will in turn collect from the customer, meaning that once you turn the invoice over, it is also no longer something you need to worry about.
Basics of freight bill factoring - Freight Bill Factoring – Right or Warning for Your Business
Even thought there is not the same approval process that you would have to go through with the bank, the factor will still want to make sure that payment from your customers is likely. Your customer list may be scrutinized, and those that pass muster can provide the freight bills for factoring. It is possible to set up a regular arrangement with the factor so that cash flow remains regular. Here are some of the things you need to keep in mind about freight bill factoring:
Documentation. Proper documentation will be needed when you present a freight bill for factoring. You will need an original bill of lading, as well as other documents that the factor may request.
Fees. Be aware that you will be charge a fee for the advance. This is typically between three percent and five percent of the total. The fee depends on how reliable your customers are, and sometimes can depend on how quickly they pay their invoices.
Reserve. Sometimes, a factor will hold a reserve from the advance on the invoice. In such cases, many of them will pay between 85 and 90 percent of the freight bill up front. This is the advance. The rest is held in reserve, just in case the invoice is not paid, or if other fees need to be collected. When the invoice is paid, the rest of the freight bill (minus the fee) is paid. For example, if you have a bill for $1,000, the company may only advance you $900 on the spot. (Remember, though, this is better than the $0 you be getting otherwise.) If the fee is three percent of the total, $30 would be subtracted from the remaining $100 when the customer pays the invoice, leaving you with an additional $70.
Recourse v. non-recourse. It is very important to determine whether or not the factor you are working with offers recourse or a non-recourse agreement. This is because it can make a very big difference in the rights the factor has in collecting on an invoice that is not paid. In a recourse agreement, the factor can require this article has all rights reserved and is copyright by 100 Best you to pay some or all of a freight bill if the customer does not pay. In a non-recourse factoring agreement, once freight bill is turned over to the factor, it is solely the factor’s responsibility. You are in the clear if the customer does not pay – you can keep your money (although you may not get the reserve back).
Getting your money from the factor. You need to find out how the factor will pay your advance. With freight bill factoring, the most common methods are wire transfer, ACH transfer and check. It is important to note that the funds may not be available for immediate withdrawal from your account. In same cases it may take 24 to 48 hours for the money to become available to you.
Freight bill factoring can be very beneficial to trucking companies. It allows you almost immediate access to capital, and can keep the cash flow in your company more liquid.
Sunday, July 3, 2011
Shaw Capital Management February Newsletter: Government bond Markets 3 of 3
Shaw Capital Management Korea February Newsletter: Article three of three - The markets are assuming that the more powerful members of the eurozone will support the weaker members in order to prevent defaults that might threaten the single currency structure; but the yield spreads have widened considerably to reflect the increased risks. Our tentative view is that the markets will “muddle through”, and that defaults will be avoided; but higher overall yield levels seem unavoidable. Prospects in these markets are therefore very unattractive. The gilt edged market has also come under pressure over the past month; short-term yields have remained basically unchanged, but there have been increases in medium and longer-term yields that has produced a much steeper yield curve.
Shaw Capital Management Korea February Newsletter: Article three of three - There has been evidence of a modest improvement in the economic background; and the Bank of England is proving to be a stabilising influence at a difficult time; but a very disappointing Pre-Budget Report has indicated that there will be no attempt to address the problems of the huge fiscal deficit until after the election. Our tentative view is that the markets will “muddle through”, and that defaults will be avoided; but higher overall yield levels seem unavoidable. Prospects in these markets are therefore very unattractive. Funding pressures will therefore continued to increase; and so, although there does not appear to be any real danger that the UK might join the list of countries that could default on their sovereign debts, annual debt issues in excess of £200 billion cannot continue for long if this is to be avoided. It is no surprise therefore that investors have reacted by reducing their exposure to the market.
Shaw Capital Management Korea February Newsletter: Article three of three - There is still some doubt whether the UK economy has moved out of recession. The pace of contraction in the third quarter of the year has been slightly reduced, and since then the pace of job losses has declined, and consumer spending has held up fairly well. But business investment and manufacturing activity remains weak, and so there may have been no overall improvement in the final quarter of last year. The Bank of England has therefore kept short-term interest rates at 0.5%, and maintained its quantitative easing programme, and this has provided support for the market, since the bank has been a major buyer of gilts in recent months.
Shaw Capital Management Korea February Newsletter: Article three of three - However it has not been enough to prevent a very adverse reaction to the Pre-Budget Report from the UK Chancellor. The market did not really expect any significant action on the deficit ahead of the forth-coming general election; but was still surprised by the apparent lack of realism. The government is prepared to allow the deficit to continue to accumulate, and is relying on the gilt edged market to provide the funds to finance that deficit in the hope that this will enable it to win the election, and has produced no real indications of how the deficit might be reduced even after the election is over. It is not surprising therefore that investors have reacted by reducing exposure, that 10-year yields have risen to 4% and longer-term yields to 4.5%, and that there are even suggestions that the country could face a capital flight and a full-blown debt crisis in the coming months. We do not share these extreme views; but clearly the prospects for the market are very unattractive, and higher yields appear unavoidable. Investors have reacted by reducing exposure... and there are even suggestions that the country could face a capital flight and a fullblown debt crisis in the coming months.
Shaw Capital Management Korea February Newsletter: Article three of three - The Japanese bond market is basically unchanged over the past month; but there are fears that present yield levels are unsustainable. A sharp reduction in the growth estimate for the third quarter of last year, and weaknesses since then have raised the possibility of a move back into recession and a further period of deflation. The government has reacted by launching its fourth fiscal rescue package since the economic crisis began last year. It amounts to the equivalent of a further $81 billion to be spent in the regions and on subsidies for consumer durables, and is expected to lift the debt issuance this year to a record $835 billion, despite the indications that bond investors may be becoming increasingly unwilling to finance such a high level of new bonds, and the warning from the IMF that the government is risking a significant increase in debt funding costs. Since overseas involvement in the bond market is at a very low level, such a development is unlikely to affect bond markets elsewhere directly; but it could be a warning to other countries of the dangers of placing too much pressure on their own markets.
Shaw Capital Management Korea - Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Shaw Capital Management Korea February Newsletter: Article three of three - There has been evidence of a modest improvement in the economic background; and the Bank of England is proving to be a stabilising influence at a difficult time; but a very disappointing Pre-Budget Report has indicated that there will be no attempt to address the problems of the huge fiscal deficit until after the election. Our tentative view is that the markets will “muddle through”, and that defaults will be avoided; but higher overall yield levels seem unavoidable. Prospects in these markets are therefore very unattractive. Funding pressures will therefore continued to increase; and so, although there does not appear to be any real danger that the UK might join the list of countries that could default on their sovereign debts, annual debt issues in excess of £200 billion cannot continue for long if this is to be avoided. It is no surprise therefore that investors have reacted by reducing their exposure to the market.
Shaw Capital Management Korea February Newsletter: Article three of three - There is still some doubt whether the UK economy has moved out of recession. The pace of contraction in the third quarter of the year has been slightly reduced, and since then the pace of job losses has declined, and consumer spending has held up fairly well. But business investment and manufacturing activity remains weak, and so there may have been no overall improvement in the final quarter of last year. The Bank of England has therefore kept short-term interest rates at 0.5%, and maintained its quantitative easing programme, and this has provided support for the market, since the bank has been a major buyer of gilts in recent months.
Shaw Capital Management Korea February Newsletter: Article three of three - However it has not been enough to prevent a very adverse reaction to the Pre-Budget Report from the UK Chancellor. The market did not really expect any significant action on the deficit ahead of the forth-coming general election; but was still surprised by the apparent lack of realism. The government is prepared to allow the deficit to continue to accumulate, and is relying on the gilt edged market to provide the funds to finance that deficit in the hope that this will enable it to win the election, and has produced no real indications of how the deficit might be reduced even after the election is over. It is not surprising therefore that investors have reacted by reducing exposure, that 10-year yields have risen to 4% and longer-term yields to 4.5%, and that there are even suggestions that the country could face a capital flight and a full-blown debt crisis in the coming months. We do not share these extreme views; but clearly the prospects for the market are very unattractive, and higher yields appear unavoidable. Investors have reacted by reducing exposure... and there are even suggestions that the country could face a capital flight and a fullblown debt crisis in the coming months.
Shaw Capital Management Korea February Newsletter: Article three of three - The Japanese bond market is basically unchanged over the past month; but there are fears that present yield levels are unsustainable. A sharp reduction in the growth estimate for the third quarter of last year, and weaknesses since then have raised the possibility of a move back into recession and a further period of deflation. The government has reacted by launching its fourth fiscal rescue package since the economic crisis began last year. It amounts to the equivalent of a further $81 billion to be spent in the regions and on subsidies for consumer durables, and is expected to lift the debt issuance this year to a record $835 billion, despite the indications that bond investors may be becoming increasingly unwilling to finance such a high level of new bonds, and the warning from the IMF that the government is risking a significant increase in debt funding costs. Since overseas involvement in the bond market is at a very low level, such a development is unlikely to affect bond markets elsewhere directly; but it could be a warning to other countries of the dangers of placing too much pressure on their own markets.
Shaw Capital Management Korea - Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management based in Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Every investor will achieve better long-term risk-adjusted results by working with a true open architecture advisor.
Shaw Capital Management Factoring: IMF Hack A Warning For Others To Invest In Staff Training
http://www.computerworld.com.au/article/390066/imf_hack_warning_others_invest_staff_training/
Hamish Barwick (Computerworld)
14 June, 2011 13:23
Staff training about simple email threats may have helped the International Monetary Fund (IMF) in New York from being hacked by a targeted malware attack, according to one analyst.
According to Bloomberg, the hack’s perpetrators obtained a “large quantity of data,” including e-mail and other documents during the intrusion.
Ovum’s UK based IT security analyst, Graham Titterington, said in a statement that many security mistakes occur within banks and other financial institutions because staff have not received sufficient training on threats.
[ With the increasing threat of cyber crimes, protect yourself and stay informed on the latest news with Computerworld's Security newsletter ]
“People are people and have innate vulnerabilities with respect to trusting the wrong people, accepting inducements, or simply having more pressing concerns at the time they are approached [via email],” he said.
While there was “no magic bullet” to prevent a cyber attack, the IMF could have also put more security measures in place.
“Most information theft attacks are launched through an Internet facing application in the corporate gateway, attacking vulnerabilities in applications using relatively predictable strategies such as SQL injection or scripting attacks,” Titterington said.
“So improving the coding standards of applications is a major step, or alternatively protecting applications by screening them with an application layer firewall.” According to Titterington, access control to systems was another area where controls were frequently circumvented, as attackers steal the credentials of legitimate users through a number of types of attack.
“Spyware is often inserted into the target organisation well before the main attack takes place to acquire this information. Monitoring data movements, data encryption, and data loss prevention systems can also reduce the loss of information directly from electronic systems, particularly with regard to high volume theft,” he said.
In the case of the IMF, data monitoring did flag the data breach, but not soon enough to prevent the hack taking place. “However, security technologies themselves are not universal panaceas, even when the vulnerabilities have been dealt with,” said Titerington.
“Data loss prevention is cumbersome and can obstruct legitimate business if it is not perfectly tuned while encryption is only as good as key management and brings the risk of losing all access to your data if you lose the key.”
Got a security tip-off? Contact Hamish Barwick at hamish_barwick at idg.com.au
Follow Hamish Barwick on Twitter: @HamishBarwick
Follow Computerworld Australia on Twitter: @ComputerworldAU
Hamish Barwick (Computerworld)
14 June, 2011 13:23
Staff training about simple email threats may have helped the International Monetary Fund (IMF) in New York from being hacked by a targeted malware attack, according to one analyst.
According to Bloomberg, the hack’s perpetrators obtained a “large quantity of data,” including e-mail and other documents during the intrusion.
Ovum’s UK based IT security analyst, Graham Titterington, said in a statement that many security mistakes occur within banks and other financial institutions because staff have not received sufficient training on threats.
[ With the increasing threat of cyber crimes, protect yourself and stay informed on the latest news with Computerworld's Security newsletter ]
“People are people and have innate vulnerabilities with respect to trusting the wrong people, accepting inducements, or simply having more pressing concerns at the time they are approached [via email],” he said.
While there was “no magic bullet” to prevent a cyber attack, the IMF could have also put more security measures in place.
“Most information theft attacks are launched through an Internet facing application in the corporate gateway, attacking vulnerabilities in applications using relatively predictable strategies such as SQL injection or scripting attacks,” Titterington said.
“So improving the coding standards of applications is a major step, or alternatively protecting applications by screening them with an application layer firewall.” According to Titterington, access control to systems was another area where controls were frequently circumvented, as attackers steal the credentials of legitimate users through a number of types of attack.
“Spyware is often inserted into the target organisation well before the main attack takes place to acquire this information. Monitoring data movements, data encryption, and data loss prevention systems can also reduce the loss of information directly from electronic systems, particularly with regard to high volume theft,” he said.
In the case of the IMF, data monitoring did flag the data breach, but not soon enough to prevent the hack taking place. “However, security technologies themselves are not universal panaceas, even when the vulnerabilities have been dealt with,” said Titerington.
“Data loss prevention is cumbersome and can obstruct legitimate business if it is not perfectly tuned while encryption is only as good as key management and brings the risk of losing all access to your data if you lose the key.”
Got a security tip-off? Contact Hamish Barwick at hamish_barwick at idg.com.au
Follow Hamish Barwick on Twitter: @HamishBarwick
Follow Computerworld Australia on Twitter: @ComputerworldAU
Sunday, June 26, 2011
Commodity Markets - Shaw Capital Management Investment
The general improvement in sentiment in the financial markets over the past month has also been evident in the commodity markets.
There has been further evidence that the global economic recovery in continuing, there has been more support for the view that the pressures resulting from the sovereign debt crisis in Europe may be easing.
As a result, base metals are generally lower over the month, even after the rally on the latest Chinese announcement about the renminbi; most soft commodity prices are slightly lower, although there have been sharp rises in beverage prices on concerns about future supplies; precious metal prices have moved higher as investors have continued to seek “safe havens in the storm”; and there has been a strong recovery in oil prices, helped by optimistic signs of a pick up in US demand.
Base metal prices are ending the past month well above recent low levels, but still slightly lower overall, and there has been an additional boost to confidence in the announcement of a “more flexible” policy towards the renminbi.
It is assumed that even a modest appreciation of the Chinese currency will boost the purchasing power of Chinese buyers, and increase still further China’s position as the world’s largest importer of a broad range of global commodities.
But there is clearly a risk that the importance of this fairly modest move is being exaggerated; and the extent of the earlier reaction should be a powerful warning of the degree of speculative activity in the markets, and the vulnerability of prices. Chinese demand clearly remains a critical factor, and the evidence suggests that it will remain reasonably strong.
Soft commodity markets have again produced a more mixed performance.
Movements in grain prices have been fairly modest, although there has been some support from a recent report by the US Department of Agriculture that the increasing importance of ethanol production will continue to draw down stock levels and help to offset the effects of what is expected to be a bumper grain crop this year.
Most price movements elsewhere have been fairly small; but there have been two significant exceptions. Cocoa prices have been pushed to their highest levels for more than 30 years because of disappointing crop levels in West Africa, and particularly in the Ivory Coast, and the warning that the fall in production will continue unless there is significant investment in new trees and in fertilisers.
There are fears that demand will outstrip supply for the fifth successive year in the 2010/2011 season, and this has forced cocoa buyers to push up prices to cover their requirements, and has exposed the position of banks and others that sold call options in the expectation that prices would fall. The second significant exception has been coffee prices, which have increased by almost 20% during the past month.
The indications are that one commodity-trading house has accumulated a very large number of futures contracts and has indicated that it intends to take delivery of the coffee.
Other funds that had sold futures contracts short have been unable to obtain the coffee to honour those contracts, and so have been forced to scramble to close them and have suffered considerable losses as prices have moved higher.
It is not yet clear whether this technical position has now been cleared; but the fundamentals do not appear to justify the price action, since Brazilian production is expected to be very high in the current season, and so, once the technical position had been cleared, prices could fall fairly sharply.
Oil prices have also been affected by the improvement in market sentiment, and have recovered very sharply over the past month.
Speculative activity has been an important factor; but there has also been an encouraging report from the US Department of Energy indicating strong demand for oil products in the US, and a larger-than-expected reduction in crude oil inventories.
There has also been evidence of continuing strong demand from China; and a warning of the onset of the hurricane season in the Gulf of Mexico, and its possible effects on production levels.
So far however the dramatic oil spill at the BP production well in the Gulf does not appear to have had a noticeable effect on market prices, although the possible consequences, especially for deep-water drilling operations in the future, could clearly become a very significant factor.
The recovery in prices has been very impressive; but it may not be sustainable. OPEC itself has recently issued a very cautious monthly report which argues that “recent developments have moved oil prices out of equilibrium”, and which emphasises that increasing supplies from non-OPEC countries are keeping downward pressure on prices.
It concludes, that “although demand has seen some improvement recently, it has been more than overwhelmed by the higher growth in supply”. It seems likely therefore that the present rally will lose momentum unless there is a serious deterioration in the political situation in the Middle East. Precious metal prices have also moved higher over the past month; investors are clearly still seeking “safe havens in the storm” despite the improvement in sentiment about prospects that has pushed some other commodity prices higher.
Gold prices have reached $1250 per ounce, and silver prices have also moved significantly higher, with exchange-traded funds aggressive buyers of both metals.
The World Gold Council, in its recent quarterly report, indicated that demand for gold was “exceptionally strong”, and that it was expected to remain so for the rest of year, “driven by jewellery demand in India and China, and investment demand in the US and in Europe”.
However it is clear that investment demand is the more important factor, with EFT gold holdings now above 2000 tons, and central banks also adding to their holdings again.
There is an obvious risk that the latest surge in prices will lead to some profit taking. But given the present situation, and particularly the risk of sovereign debt defaults, it would be unwise to assume that the improvement in precious metal prices in over.
At Shaw Capital Management we give you the information and insight you need to make the right investment choices.
There has been further evidence that the global economic recovery in continuing, there has been more support for the view that the pressures resulting from the sovereign debt crisis in Europe may be easing.
As a result, base metals are generally lower over the month, even after the rally on the latest Chinese announcement about the renminbi; most soft commodity prices are slightly lower, although there have been sharp rises in beverage prices on concerns about future supplies; precious metal prices have moved higher as investors have continued to seek “safe havens in the storm”; and there has been a strong recovery in oil prices, helped by optimistic signs of a pick up in US demand.
Base metal prices are ending the past month well above recent low levels, but still slightly lower overall, and there has been an additional boost to confidence in the announcement of a “more flexible” policy towards the renminbi.
It is assumed that even a modest appreciation of the Chinese currency will boost the purchasing power of Chinese buyers, and increase still further China’s position as the world’s largest importer of a broad range of global commodities.
But there is clearly a risk that the importance of this fairly modest move is being exaggerated; and the extent of the earlier reaction should be a powerful warning of the degree of speculative activity in the markets, and the vulnerability of prices. Chinese demand clearly remains a critical factor, and the evidence suggests that it will remain reasonably strong.
Soft commodity markets have again produced a more mixed performance.
Movements in grain prices have been fairly modest, although there has been some support from a recent report by the US Department of Agriculture that the increasing importance of ethanol production will continue to draw down stock levels and help to offset the effects of what is expected to be a bumper grain crop this year.
Most price movements elsewhere have been fairly small; but there have been two significant exceptions. Cocoa prices have been pushed to their highest levels for more than 30 years because of disappointing crop levels in West Africa, and particularly in the Ivory Coast, and the warning that the fall in production will continue unless there is significant investment in new trees and in fertilisers.
There are fears that demand will outstrip supply for the fifth successive year in the 2010/2011 season, and this has forced cocoa buyers to push up prices to cover their requirements, and has exposed the position of banks and others that sold call options in the expectation that prices would fall. The second significant exception has been coffee prices, which have increased by almost 20% during the past month.
The indications are that one commodity-trading house has accumulated a very large number of futures contracts and has indicated that it intends to take delivery of the coffee.
Other funds that had sold futures contracts short have been unable to obtain the coffee to honour those contracts, and so have been forced to scramble to close them and have suffered considerable losses as prices have moved higher.
It is not yet clear whether this technical position has now been cleared; but the fundamentals do not appear to justify the price action, since Brazilian production is expected to be very high in the current season, and so, once the technical position had been cleared, prices could fall fairly sharply.
Oil prices have also been affected by the improvement in market sentiment, and have recovered very sharply over the past month.
Speculative activity has been an important factor; but there has also been an encouraging report from the US Department of Energy indicating strong demand for oil products in the US, and a larger-than-expected reduction in crude oil inventories.
There has also been evidence of continuing strong demand from China; and a warning of the onset of the hurricane season in the Gulf of Mexico, and its possible effects on production levels.
So far however the dramatic oil spill at the BP production well in the Gulf does not appear to have had a noticeable effect on market prices, although the possible consequences, especially for deep-water drilling operations in the future, could clearly become a very significant factor.
The recovery in prices has been very impressive; but it may not be sustainable. OPEC itself has recently issued a very cautious monthly report which argues that “recent developments have moved oil prices out of equilibrium”, and which emphasises that increasing supplies from non-OPEC countries are keeping downward pressure on prices.
It concludes, that “although demand has seen some improvement recently, it has been more than overwhelmed by the higher growth in supply”. It seems likely therefore that the present rally will lose momentum unless there is a serious deterioration in the political situation in the Middle East. Precious metal prices have also moved higher over the past month; investors are clearly still seeking “safe havens in the storm” despite the improvement in sentiment about prospects that has pushed some other commodity prices higher.
Gold prices have reached $1250 per ounce, and silver prices have also moved significantly higher, with exchange-traded funds aggressive buyers of both metals.
The World Gold Council, in its recent quarterly report, indicated that demand for gold was “exceptionally strong”, and that it was expected to remain so for the rest of year, “driven by jewellery demand in India and China, and investment demand in the US and in Europe”.
However it is clear that investment demand is the more important factor, with EFT gold holdings now above 2000 tons, and central banks also adding to their holdings again.
There is an obvious risk that the latest surge in prices will lead to some profit taking. But given the present situation, and particularly the risk of sovereign debt defaults, it would be unwise to assume that the improvement in precious metal prices in over.
At Shaw Capital Management we give you the information and insight you need to make the right investment choices.
Financial Markets Focusing Greece and Spain - Shaw Capital Management Newsletter
The situation in Greece and in Spain has obviously caused great concern in London. But the Bank is also aware of the risks as a time when the economy is still in a very fragile state, and of the need to compensate for the fiscal retrenchment by maintaining a supportive monetary policy, and low short-term interest rates. There are therefore reasons for concern about the prospects for sterling. If the latest measures do succeed in reducing the fiscal deficit to manageable levels without aborting the economic recovery, and if the problems affecting the euro continue, or become even more serious, then sterling may well maintain current levels or even appreciate further.
Shaw Capital Management, Korea - Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
But the situation is very uncertain, and the odds do seem to favour a further period of weakness until the effects of the latest government measures can be more accurately assessed.
The yen has weakened slightly over the past month as the improvement in market sentiment has increased
the “risk appetite” of investors for the equity markets, and for commodity-related currencies.
The economic background in Japan has continued to improve, helped by the export performance; but there are still doubts about whether this improvement can be sustained, and these doubts have been increased by the latest announcement by the new prime minister that the main priority of his government will be a reduction in the huge fiscal deficit, rather than the promotion of fresh measures to accelerate the growth rate.
There is also a further uncertainty created by the decision by the Chinese authorities to adopt a “more flexible” policy on the renminbi that presumably means that it will be allowed to appreciate slightly faster. It is not clear what the consequences of this move will be; but overall it seems likely that conditions elsewhere, especially those affecting the euro, and some disappointment with “risky” investments in global mark
Shaw Capital Management, Korea - Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
But the situation is very uncertain, and the odds do seem to favour a further period of weakness until the effects of the latest government measures can be more accurately assessed.
The yen has weakened slightly over the past month as the improvement in market sentiment has increased
the “risk appetite” of investors for the equity markets, and for commodity-related currencies.
The economic background in Japan has continued to improve, helped by the export performance; but there are still doubts about whether this improvement can be sustained, and these doubts have been increased by the latest announcement by the new prime minister that the main priority of his government will be a reduction in the huge fiscal deficit, rather than the promotion of fresh measures to accelerate the growth rate.
There is also a further uncertainty created by the decision by the Chinese authorities to adopt a “more flexible” policy on the renminbi that presumably means that it will be allowed to appreciate slightly faster. It is not clear what the consequences of this move will be; but overall it seems likely that conditions elsewhere, especially those affecting the euro, and some disappointment with “risky” investments in global mark
Wednesday, June 22, 2011
Latest World Headlines: Shaw Capital Management
Published: June 6 2011 22:59 | Last updated: June 6 2011 22:59
Investment products described as “guaranteed”, “protected” or “secure” may have to carry an explanation stating exactly what these terms mean, in the latest warning from the Financial Services Authority that financial companies are not properly advertising risk to consumers.
So-called structured products, which offer people exposure to the stock market with some level of protection, were being promoted “without any clear and adequate justification for the descriptions used”, the regulator said in a quarterly consultation paper on Monday. It has proposed introducing guidelines that would force financial services companies to explain the use of terms such as “guaranteed” in advertisements or fact sheets.
Investment products described as “guaranteed”, “protected” or “secure” may have to carry an explanation stating exactly what these terms mean, in the latest warning from the Financial Services Authority that financial companies are not properly advertising risk to consumers.
So-called structured products, which offer people exposure to the stock market with some level of protection, were being promoted “without any clear and adequate justification for the descriptions used”, the regulator said in a quarterly consultation paper on Monday. It has proposed introducing guidelines that would force financial services companies to explain the use of terms such as “guaranteed” in advertisements or fact sheets.
SHAW CAPITAL MANAGEMENT:Shaw warns FSA stance on mutuals could force mergers
SHAW CAPITAL MANAGEMENT:Shaw warns FSA stance on mutuals could force mergers
Martin Shaw, chief executive of the Association of Financial Mutuals has warned that the Financial Services Authority s stance on friendly society s use of with-profits funds will force societies to merge or demutualise in order to survive.
The FSA has sent a dear CEO letter to friendly societies » Full Story on clipmarks.com
Diamond Could Store Quantum Information
When it comes to quantum computing, flawed diamonds are better than perfect ones. Click to enlarge this image.
Ann Thomas/Corbis
THE GIST
* By manipulating atoms inside diamonds, scientists have developed a new way to store information.
* The technique could lead to quantum computers capable of solving problems beyond the reach of today's technology.
One of the most common defects in diamond is nitrogen, which turns the stone yellow. When a nitrogen atom sits next to a vacant spot in the carbon crystal, the intruding element provides an extra electron that moves into the hole. Several years ago, scientists learned how to change the spin of such electrons using microwave energy and put them to work as quantum bits, or qubits.
The technique has "a fidelity of 85 to 95 percent," Awschalom said March 22
this diamond memory works at room temperature. The spins inside the diamond can be both changed and measured by shining laser light into the diamond
Martin Shaw, chief executive of the Association of Financial Mutuals has warned that the Financial Services Authority s stance on friendly society s use of with-profits funds will force societies to merge or demutualise in order to survive.
The FSA has sent a dear CEO letter to friendly societies » Full Story on clipmarks.com
Diamond Could Store Quantum Information
When it comes to quantum computing, flawed diamonds are better than perfect ones. Click to enlarge this image.
Ann Thomas/Corbis
THE GIST
* By manipulating atoms inside diamonds, scientists have developed a new way to store information.
* The technique could lead to quantum computers capable of solving problems beyond the reach of today's technology.
One of the most common defects in diamond is nitrogen, which turns the stone yellow. When a nitrogen atom sits next to a vacant spot in the carbon crystal, the intruding element provides an extra electron that moves into the hole. Several years ago, scientists learned how to change the spin of such electrons using microwave energy and put them to work as quantum bits, or qubits.
The technique has "a fidelity of 85 to 95 percent," Awschalom said March 22
this diamond memory works at room temperature. The spins inside the diamond can be both changed and measured by shining laser light into the diamond
Shaw Capital Management - Investment Innovation & Excellence
Shaw Capital Management
At Shaw Capital Management we give you the information and insight you need to make the right investment choices.
We look forward to working with you and being the open architects of your financial well being.
Read more about our company and how we can help you to manage your wealth and reach your investment goals.
A New Economy
Smart money is now wise to the problems of the past years; good investments are now here.
Shaw Capital Management and the New Economy
Read more about Shaw Capital and the New Economy.
Strategies
Our goal is to provide consistent quality investment advice to our clients.
Shaw Capital Management and our Investment Strategies
Read more about our corporate strategies.
Services
As the leading open architecture advisory firm, we possess a number of characteristics that set us apart from other companies.
* Independence
* Experience
* Making our experience count
* Intellectual leadership
* Centralized knowledge base
Learn more about our unique service offer.
Downloads
Keep up to date with Shaw Capital news and important industry developments.
Visit our download page and document library.
Account Forms
Our account forms are available for download at any time. Should you require any assistance completing them, please don't hesitate to contact an advisor.
Request a call
If you would like one of our experienced advisors to contact you about your investment needs, please feel free to request a no-obligation call from a member of our team.
Contact us
Please visit our contact page or use the following contact details:
Email us: info@shaw-capital.com
This web site is copyright © Shaw Capital Management 2010
http://www.shaw-capital.com
At Shaw Capital Management we give you the information and insight you need to make the right investment choices.
We look forward to working with you and being the open architects of your financial well being.
Read more about our company and how we can help you to manage your wealth and reach your investment goals.
A New Economy
Smart money is now wise to the problems of the past years; good investments are now here.
Shaw Capital Management and the New Economy
Read more about Shaw Capital and the New Economy.
Strategies
Our goal is to provide consistent quality investment advice to our clients.
Shaw Capital Management and our Investment Strategies
Read more about our corporate strategies.
Services
As the leading open architecture advisory firm, we possess a number of characteristics that set us apart from other companies.
* Independence
* Experience
* Making our experience count
* Intellectual leadership
* Centralized knowledge base
Learn more about our unique service offer.
Downloads
Keep up to date with Shaw Capital news and important industry developments.
Visit our download page and document library.
Account Forms
Our account forms are available for download at any time. Should you require any assistance completing them, please don't hesitate to contact an advisor.
Request a call
If you would like one of our experienced advisors to contact you about your investment needs, please feel free to request a no-obligation call from a member of our team.
Contact us
Please visit our contact page or use the following contact details:
Email us: info@shaw-capital.com
This web site is copyright © Shaw Capital Management 2010
http://www.shaw-capital.com
Sunday, June 19, 2011
Shaw Capital Management August Newsletter: Financial Markets Focusing Europe
The big fall in the euro in recent months is clearly having a significant impact on the performance of the
euro-zone economy.
Shaw Capital Management, Korea - Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Factory output expanded at a record pace in April, helped by investment spending associated with the export effort, and overseas demand for European capital equipment, and the trend appears to be continuing. The major beneficiary has been Germany, but other northern member countries are also involved.
However the situation is much less encouraging in Greece, Spain, and Portugal, because they are less competitive in export markets, and are being forced to introduce austerity measures to reduce their fiscal deficits.
Domestic demand across the entire euro-zone remains weak, and so, despite the export performance of some member countries, it seems unlikely that the overall growth rate for the zone this year will reach 2%. The European Central Bank remains reasonably optimistic about prospects; but fortunately it has not moved towards an “exit strategy” that might involve reversing the measures that were introduced to counter the recession.
Short-term interest rates have been left unchanged and close to zero, the programme to provide unlimited three-month loans to the banking system is continuing, and the bank is also still intervening in the markets to buy the bonds of weaker member countries that had been sold heavily because of fears about debt defaults. The bank is therefore continuing to provide support for the system; but it is not really doing enough to offset the concerns about the debt crisis.
Greece remains in the eye of the storm; but there have been increasing concerns about the situation in Spain; and the situation has been made worse by the latest warning from the Fitch Ratings agency that it may take further massive asset purchases by the European Central Bank to prevent the sovereign debt crisis in the area escalating out of control.
Shaw Capital Management August 2010: Financial Markets Focusing Europe - There are fears that Spain will need to follow Greece in requesting help from other member countries and the IMF to enable it to avoid a default, and that Portugal, and perhaps even Italy, may also need to be rescued.
The pressures on the euro will therefore be intense; and whilst there may well be further support from the Swiss National Bank and others, the future of the single currency system clearly remains very uncertain. The latest modest rally in the euro must therefore be treated with great care.
Sterling has recovered from the weakness that developed in May, and is ending the month higher. The economic background in the UK has not provided any real support, and the Bank of England is clearly intending to maintain short-term interest rates at very low levels; but there has been some movement of funds out of the euro into sterling, and the new coalition government in the UK has introduced measures to reduce the massive fiscal deficit that have been well received in the markets and led to an improvement in sentiment.
There is clearly a risk that these latest measures in the Budget will depress the level of activity still further, and fail to solve the fiscal problems; but for the moment it seems that the new government is being given the benefit of the doubt.
The evidence on the performance of the economy ahead of the Budget announcement was still pointing to a very slow recovery in activity.
The manufacturing sector is reasonably buoyant, with exports expanding rapidly; and retail sales also increased more quickly than expected.
But unemployment rose again to 2.47 million, and the latest survey from the CBI indicated that the value and volume of business in the services sector fell, and that further weakness was expected in the second half of the year.
However the situation has obviously been changed significantly by the latest Budget measures, and the latest estimates from the newly-formed Office for Budget Responsibility are that growth will now only be 1.2% this year, rising to 2.3% next year, and improving slightly in succeeding years.
The Bank of England has welcomed the decision by the new government to introduce measures to address the problems created by the huge fiscal deficit. The governor, Mervyn King, argued recently that they would “eliminate some of the downside risks…and are desirable to remove the risk of an adverse market reaction.”
euro-zone economy.
Shaw Capital Management, Korea - Investment Innovation & Excellence. We provide the information, insight and expertise that you need to make the right investment choices. Shaw Capital Management Korea typically offers its clients such services as asset allocation and portfolio design; traditional and non-traditional manager review and selection; portfolio implementation; portfolio monitoring and consolidated performance reporting; and other wealth management services, including estate, tax, trust and insurance planning, asset custody, closely held business issues associated with the establishment or expansion of a family office, the formation of family investment partnerships or LLCs, philanthropy, family dynamics and inter-generation issues, etc.
Factory output expanded at a record pace in April, helped by investment spending associated with the export effort, and overseas demand for European capital equipment, and the trend appears to be continuing. The major beneficiary has been Germany, but other northern member countries are also involved.
However the situation is much less encouraging in Greece, Spain, and Portugal, because they are less competitive in export markets, and are being forced to introduce austerity measures to reduce their fiscal deficits.
Domestic demand across the entire euro-zone remains weak, and so, despite the export performance of some member countries, it seems unlikely that the overall growth rate for the zone this year will reach 2%. The European Central Bank remains reasonably optimistic about prospects; but fortunately it has not moved towards an “exit strategy” that might involve reversing the measures that were introduced to counter the recession.
Short-term interest rates have been left unchanged and close to zero, the programme to provide unlimited three-month loans to the banking system is continuing, and the bank is also still intervening in the markets to buy the bonds of weaker member countries that had been sold heavily because of fears about debt defaults. The bank is therefore continuing to provide support for the system; but it is not really doing enough to offset the concerns about the debt crisis.
Greece remains in the eye of the storm; but there have been increasing concerns about the situation in Spain; and the situation has been made worse by the latest warning from the Fitch Ratings agency that it may take further massive asset purchases by the European Central Bank to prevent the sovereign debt crisis in the area escalating out of control.
Shaw Capital Management August 2010: Financial Markets Focusing Europe - There are fears that Spain will need to follow Greece in requesting help from other member countries and the IMF to enable it to avoid a default, and that Portugal, and perhaps even Italy, may also need to be rescued.
The pressures on the euro will therefore be intense; and whilst there may well be further support from the Swiss National Bank and others, the future of the single currency system clearly remains very uncertain. The latest modest rally in the euro must therefore be treated with great care.
Sterling has recovered from the weakness that developed in May, and is ending the month higher. The economic background in the UK has not provided any real support, and the Bank of England is clearly intending to maintain short-term interest rates at very low levels; but there has been some movement of funds out of the euro into sterling, and the new coalition government in the UK has introduced measures to reduce the massive fiscal deficit that have been well received in the markets and led to an improvement in sentiment.
There is clearly a risk that these latest measures in the Budget will depress the level of activity still further, and fail to solve the fiscal problems; but for the moment it seems that the new government is being given the benefit of the doubt.
The evidence on the performance of the economy ahead of the Budget announcement was still pointing to a very slow recovery in activity.
The manufacturing sector is reasonably buoyant, with exports expanding rapidly; and retail sales also increased more quickly than expected.
But unemployment rose again to 2.47 million, and the latest survey from the CBI indicated that the value and volume of business in the services sector fell, and that further weakness was expected in the second half of the year.
However the situation has obviously been changed significantly by the latest Budget measures, and the latest estimates from the newly-formed Office for Budget Responsibility are that growth will now only be 1.2% this year, rising to 2.3% next year, and improving slightly in succeeding years.
The Bank of England has welcomed the decision by the new government to introduce measures to address the problems created by the huge fiscal deficit. The governor, Mervyn King, argued recently that they would “eliminate some of the downside risks…and are desirable to remove the risk of an adverse market reaction.”
Shaw Capital Management August 2010: Financial Markets
Sentiment in the financial markets has improved over the past month. There has been further evidence that
the recovery in the global economy is continuing; the sovereign debt crisis in Europe has not yet produced a major casualty; there has been a modest rally in the euro; and the Chinese authorities have announced that they intend to adopt a “more flexible” policy towards the renminbi that is expected to allow it to appreciate at a slightly faster rate.
Shaw Capital Management August 2010: Financial Markets - These developments have suggested that the gloom was overdone. The effect in the currency markets had been to slightly weaken both the dollar and the yen, as the “risk appetite” amongst investors and traders has increased, and to strengthen the commodity-linked currencies and ease the pressures on the euro. Sterling has also improved over the month, helped by the measures announced by the new coalition government in the UK, both before and during the recent budget statement, to significantly reduce the huge fiscal deficit.
Shaw Capital Management views on financial market - But overall movements in the major currencies have been fairly small, and there is still considerable optimism about prospects.
The latest evidence on the performance of the US economy has enhanced the prospects for the dollar, and this should also continue to provide some stability for the yen.
The sovereign debt problems in Greece, Spain, Portugal, and even in Italy, continue to worsen, and may well lead to defaults and put further pressure on the single currency system.
There must also be serious doubts about the latest improvement in sterling.
The new government in the UK is making credible efforts to reduce the size of the fiscal deficit; but it faces a daunting task, and will find it very difficult to maintain its tough stance.
There is therefore a serious risk of a crisis in the UK currency market, and so it is crucial that the international agencies prepare contingency measures to enable them to act quickly if the situation appears to be running out of control.
The latest available evidence on the performance of the US economy; show the recovery from recession remains on track.
Retail sales were 1.2% lower in May than in April, emphasising the cautious mood amongst consumers; non-farm payrolls increased by 431,000 in May, but 411,000 jobs were accounted for by temporary government hiring to complete the 2010 census, leaving the increase in “real” jobs well below expectations; new home starts fell sharply in May following the withdrawal of government measures to prop up the market, and existing home sales also fel.
And the M3 measure of broad money growth is also continuing to decline because of weak loan demand from reliable borrowers, and the reluctance of the banks to lend to anyone else. There are offsetting factors in the strength of the manufacturing sector; and consumer confidence figures remain reasonably strong.
The Commerce Department has recently revised its estimate of growth in the first quarter of the year down to a 3% annualised rate; but this rate may not have been maintained in the current quarter; and this has already led to a strong plea to Congress from the government to authorise additional spending programmes costing up to $50 billion “to keep the recovery on track”, it is not clear how Congress will respond.
The Fed chairman, Ben Bernanke’s recently testimony to Congress; that the pace of the recovery will not be strong enough to fix the jobs market or reduce the budget deficit without further help, also argued that, despite the size of that deficit, “to avoid sharp, disruptive shifts in spending programmes and tax
policies in the future, and to retain the confidence of the public and the markets, we should start planning now how we will meet these budgetary challenges”. This view about the economy is repeated in the statement after the latest meeting of the bank’s Open Market Committee, and so, although the bank believes
that the recovery is continuing, it is not surprising that it is quietly considering what steps it might have to take if the recovery unexpectedly falters.
There has been a modest recovery in the euro from a low-point in the early part of the past month, although it is still ending the period slightly lower.
The economic background in the euro-zone is continuing to improve, and there has been evidence of support for the euro, particularly from the Swiss National Bank, which reported an increase in its foreign currency reserves of more than $100 billion in May. But the benefits have been limited by the on-going sovereign debt problems amongst some member countries of the euro-zone, and especially by the serious deterioration in the situation in Spain, and so the improvement that has occurred remains very fragile.
the recovery in the global economy is continuing; the sovereign debt crisis in Europe has not yet produced a major casualty; there has been a modest rally in the euro; and the Chinese authorities have announced that they intend to adopt a “more flexible” policy towards the renminbi that is expected to allow it to appreciate at a slightly faster rate.
Shaw Capital Management August 2010: Financial Markets - These developments have suggested that the gloom was overdone. The effect in the currency markets had been to slightly weaken both the dollar and the yen, as the “risk appetite” amongst investors and traders has increased, and to strengthen the commodity-linked currencies and ease the pressures on the euro. Sterling has also improved over the month, helped by the measures announced by the new coalition government in the UK, both before and during the recent budget statement, to significantly reduce the huge fiscal deficit.
Shaw Capital Management views on financial market - But overall movements in the major currencies have been fairly small, and there is still considerable optimism about prospects.
The latest evidence on the performance of the US economy has enhanced the prospects for the dollar, and this should also continue to provide some stability for the yen.
The sovereign debt problems in Greece, Spain, Portugal, and even in Italy, continue to worsen, and may well lead to defaults and put further pressure on the single currency system.
There must also be serious doubts about the latest improvement in sterling.
The new government in the UK is making credible efforts to reduce the size of the fiscal deficit; but it faces a daunting task, and will find it very difficult to maintain its tough stance.
There is therefore a serious risk of a crisis in the UK currency market, and so it is crucial that the international agencies prepare contingency measures to enable them to act quickly if the situation appears to be running out of control.
The latest available evidence on the performance of the US economy; show the recovery from recession remains on track.
Retail sales were 1.2% lower in May than in April, emphasising the cautious mood amongst consumers; non-farm payrolls increased by 431,000 in May, but 411,000 jobs were accounted for by temporary government hiring to complete the 2010 census, leaving the increase in “real” jobs well below expectations; new home starts fell sharply in May following the withdrawal of government measures to prop up the market, and existing home sales also fel.
And the M3 measure of broad money growth is also continuing to decline because of weak loan demand from reliable borrowers, and the reluctance of the banks to lend to anyone else. There are offsetting factors in the strength of the manufacturing sector; and consumer confidence figures remain reasonably strong.
The Commerce Department has recently revised its estimate of growth in the first quarter of the year down to a 3% annualised rate; but this rate may not have been maintained in the current quarter; and this has already led to a strong plea to Congress from the government to authorise additional spending programmes costing up to $50 billion “to keep the recovery on track”, it is not clear how Congress will respond.
The Fed chairman, Ben Bernanke’s recently testimony to Congress; that the pace of the recovery will not be strong enough to fix the jobs market or reduce the budget deficit without further help, also argued that, despite the size of that deficit, “to avoid sharp, disruptive shifts in spending programmes and tax
policies in the future, and to retain the confidence of the public and the markets, we should start planning now how we will meet these budgetary challenges”. This view about the economy is repeated in the statement after the latest meeting of the bank’s Open Market Committee, and so, although the bank believes
that the recovery is continuing, it is not surprising that it is quietly considering what steps it might have to take if the recovery unexpectedly falters.
There has been a modest recovery in the euro from a low-point in the early part of the past month, although it is still ending the period slightly lower.
The economic background in the euro-zone is continuing to improve, and there has been evidence of support for the euro, particularly from the Swiss National Bank, which reported an increase in its foreign currency reserves of more than $100 billion in May. But the benefits have been limited by the on-going sovereign debt problems amongst some member countries of the euro-zone, and especially by the serious deterioration in the situation in Spain, and so the improvement that has occurred remains very fragile.
Shaw Capital Management Korea: Postal Reform Rollback
The Japanese government has decided to revise the
proposed reforms of the postal system …
Shaw Capital Management Korea: One of the world’s largest financial institutions
The government now proposes to absorb Japan Post
Network Co. and Japan Post Service Co. into Japan Post
Holdings on October 1, 2011.
The newly consolidated holding group will continue
to have two financial units, turning the system into a
three-company structure, from the current five
companies (currently, the system consists of Japan Post
Holdings Co. and four units — a postal service, a savings
bank, a life insurance company and a retailer for the
services of the other three).
Under the new plan, the current Democratic Party of
Japan-led government (DPJ) also plans to double the
maximum amount of deposits that Japan Post’s banking
unit can accept per person from the current ¥10 million
to ¥20 million and to raise postal insurance coverage
from the current ¥13 million to ¥25 million.
The government is also likely to hold on to more than
a third of the postal group’s shares in a turnaround
from full privatization — this will enable the
government to veto any major changes in the firm.
The bill with these latest changes, is expected to be
submitted to the Diet.
“We made the bill’s outline with the aim of ensuring
that Japan Post will sufficiently offer universal services
throughout the nation”, Shizuka Kamei, Japan’s Finance
Minister, told reporters at a press conference.
The Japan Post group provides insurance services
through its 24,000 post offices across the nation
especially in rural areas where private banks have little
or no presence or have trouble gaining the trust of
locals, and holds savings accounts for about 57 million
people.
The group as a whole employs about 226,000 people
and, with assets of more than ¥300,000 billion, sits at
the heart of a system of public institutions that own
almost half of Japan’s national debt.
Moreover, it helps to keep the government’s cost of
borrowing low even as its gross debt closes in on 200%
of annual output.
Japan Post was nominally privatised in 2003; with the
reforms spearheaded by former Prime Minister
Junichiro Koizumi, the champion of structural reforms
for a more market-oriented economy.
Under the previous plan, Japan Post’s financial units
were to be fully released from government control by
2017. With these latest moves, Prime Minister Yukio
Hatoyama’s government, which took power last
September from the long-ruling Liberal Democratic
Party (LDP), is halting the sale of its shares to maintain
control over the company’s plentiful assets, long a
source of public financing.
Behind the proposal is the government need for a
growth strategy.
In the fiscal 2010 budget, general-account expenditures
stand at a record ¥92 trillion, so politicians are pushing
for postal savings to be used to finance their policies.
But these proposed changes to postal reform raise
numerous concerns.
First of all, if the massive postal group attracts even
more money with the lifting of the savings cap, it will
hamper private-sector financial businesses and spark
an outflow of funds from private banks.
Tadashi Ogawa, chairman of the Regional Banks
Association, says raising the deposit cap is “truly
regrettable” because small regional banks in particular
will be affected in times of financial crisis because
depositors may flee to Japan Post Bank.
Moreover, the two subsidiaries — the postal bank and
insurance company — are likely to be permitted
substantial operational freedom.
This would, for example, enable them to offer housing
loans or sell cancer insurance policies.
The uneven public-private playing field, however,
would no longer be just a domestic problem. The US
and Europe have already expressed concerns about
these developments.
Also, creating an even bigger public financial entity
will loosen the government’s fiscal discipline through
increased purchases of government bonds (JGBs) and
accelerate wasteful spending on public works projects.
The system of public institutions buying JGBs has been
central to the economic status quo that has kept Japan
afloat since its stock market plunged in 1990.
“The revision will be a turning point for the worse”,
says Naoko Nemoto, a banking analyst at rating agency
Standard & Poor’s in Japan.
The deep misgivings over public spending originate
from the way postal savings were used for years.
The money had long been used to fund unnecessary
public projects such as highways, bridges and airports
in the middle of nowhere via the Finance Ministry’s
fiscal investment and loan program, which was
reformed in 2001.
These expenditures were not only inefficient but also
lacked transparency because they were made through
government-affiliated organisations.
Creating an even bigger public financial entity is also
risky because it will distort the entire interest-rate
structure of financial markets, where loans with higher
risks should reflect higher returns.
If a public institution extends loans with below-market
interest rates to support certain industries, we are back
to the government ‘picking winners’ or worse just
backing losers.
In other words, this is yet another example of how the
DPJ is mis-managing the Japanese economy, pandering
to voters and reversing necessary reforms passed by
the Koizumi government.
Shaw Capital Management Korea: World Trade
The fall-out from the failure of the Doha Round of trade
liberalisation measures, and the impact of the recession,
are continuing to increase the threat of further
protectionist restrictions on world trading activities.
The US Commerce Department has recently launched
an investigation into whether certain forms of
aluminium made in China is being dumped, or sold at
less than its fair value, in the US; and the Chinese
Commerce Ministry has responded by launching its
own anti-dumping enquires into imports of
caprolactam, a widely-used synthetic polymer, from
both the US and Europe, and has finalised the ruling
on some nylon imports.
These developments are not likely to lead to early and
dramatic changes; but they do provide a further
illustration of the dangers if the global economic
recovery does not accelerate and lead to a relaxation
of the pressures in the trading system.
proposed reforms of the postal system …
Shaw Capital Management Korea: One of the world’s largest financial institutions
The government now proposes to absorb Japan Post
Network Co. and Japan Post Service Co. into Japan Post
Holdings on October 1, 2011.
The newly consolidated holding group will continue
to have two financial units, turning the system into a
three-company structure, from the current five
companies (currently, the system consists of Japan Post
Holdings Co. and four units — a postal service, a savings
bank, a life insurance company and a retailer for the
services of the other three).
Under the new plan, the current Democratic Party of
Japan-led government (DPJ) also plans to double the
maximum amount of deposits that Japan Post’s banking
unit can accept per person from the current ¥10 million
to ¥20 million and to raise postal insurance coverage
from the current ¥13 million to ¥25 million.
The government is also likely to hold on to more than
a third of the postal group’s shares in a turnaround
from full privatization — this will enable the
government to veto any major changes in the firm.
The bill with these latest changes, is expected to be
submitted to the Diet.
“We made the bill’s outline with the aim of ensuring
that Japan Post will sufficiently offer universal services
throughout the nation”, Shizuka Kamei, Japan’s Finance
Minister, told reporters at a press conference.
The Japan Post group provides insurance services
through its 24,000 post offices across the nation
especially in rural areas where private banks have little
or no presence or have trouble gaining the trust of
locals, and holds savings accounts for about 57 million
people.
The group as a whole employs about 226,000 people
and, with assets of more than ¥300,000 billion, sits at
the heart of a system of public institutions that own
almost half of Japan’s national debt.
Moreover, it helps to keep the government’s cost of
borrowing low even as its gross debt closes in on 200%
of annual output.
Japan Post was nominally privatised in 2003; with the
reforms spearheaded by former Prime Minister
Junichiro Koizumi, the champion of structural reforms
for a more market-oriented economy.
Under the previous plan, Japan Post’s financial units
were to be fully released from government control by
2017. With these latest moves, Prime Minister Yukio
Hatoyama’s government, which took power last
September from the long-ruling Liberal Democratic
Party (LDP), is halting the sale of its shares to maintain
control over the company’s plentiful assets, long a
source of public financing.
Behind the proposal is the government need for a
growth strategy.
In the fiscal 2010 budget, general-account expenditures
stand at a record ¥92 trillion, so politicians are pushing
for postal savings to be used to finance their policies.
But these proposed changes to postal reform raise
numerous concerns.
First of all, if the massive postal group attracts even
more money with the lifting of the savings cap, it will
hamper private-sector financial businesses and spark
an outflow of funds from private banks.
Tadashi Ogawa, chairman of the Regional Banks
Association, says raising the deposit cap is “truly
regrettable” because small regional banks in particular
will be affected in times of financial crisis because
depositors may flee to Japan Post Bank.
Moreover, the two subsidiaries — the postal bank and
insurance company — are likely to be permitted
substantial operational freedom.
This would, for example, enable them to offer housing
loans or sell cancer insurance policies.
The uneven public-private playing field, however,
would no longer be just a domestic problem. The US
and Europe have already expressed concerns about
these developments.
Also, creating an even bigger public financial entity
will loosen the government’s fiscal discipline through
increased purchases of government bonds (JGBs) and
accelerate wasteful spending on public works projects.
The system of public institutions buying JGBs has been
central to the economic status quo that has kept Japan
afloat since its stock market plunged in 1990.
“The revision will be a turning point for the worse”,
says Naoko Nemoto, a banking analyst at rating agency
Standard & Poor’s in Japan.
The deep misgivings over public spending originate
from the way postal savings were used for years.
The money had long been used to fund unnecessary
public projects such as highways, bridges and airports
in the middle of nowhere via the Finance Ministry’s
fiscal investment and loan program, which was
reformed in 2001.
These expenditures were not only inefficient but also
lacked transparency because they were made through
government-affiliated organisations.
Creating an even bigger public financial entity is also
risky because it will distort the entire interest-rate
structure of financial markets, where loans with higher
risks should reflect higher returns.
If a public institution extends loans with below-market
interest rates to support certain industries, we are back
to the government ‘picking winners’ or worse just
backing losers.
In other words, this is yet another example of how the
DPJ is mis-managing the Japanese economy, pandering
to voters and reversing necessary reforms passed by
the Koizumi government.
Shaw Capital Management Korea: World Trade
The fall-out from the failure of the Doha Round of trade
liberalisation measures, and the impact of the recession,
are continuing to increase the threat of further
protectionist restrictions on world trading activities.
The US Commerce Department has recently launched
an investigation into whether certain forms of
aluminium made in China is being dumped, or sold at
less than its fair value, in the US; and the Chinese
Commerce Ministry has responded by launching its
own anti-dumping enquires into imports of
caprolactam, a widely-used synthetic polymer, from
both the US and Europe, and has finalised the ruling
on some nylon imports.
These developments are not likely to lead to early and
dramatic changes; but they do provide a further
illustration of the dangers if the global economic
recovery does not accelerate and lead to a relaxation
of the pressures in the trading system.
Sunday, June 12, 2011
Salamat Shaw Capital Management Korea: Portfolio Recommendations
We have made no changes in our portfolios this month.
The latest developments in the government debt
markets have increased the uncertainties about
prospects for both the bond and financial markets.
However, although the pace of the global economic
recovery may be affected, there appears to be enough
momentum to enable it to continue.
We have therefore maintained the level of our exposure
to the equity markets; and we have left 10% of the funds
in the portfolio in cash deposits as a contingency
measure. Bond exposure is zero.
Shaw Capital Management Korea: Portfolio
Recommendations - The UK Hung Parliament
The bond markets are totally calm about the hung
Parliament, as they are about both UK and US bond
prospects, with yields still below 4%, in spite of the
huge deficits both countries are running.
What is going on?
The first point is that both countries are recovering,
and seem set for growth rates in the 2–3% range.
Such growth is not ‘V-shaped’ but a V was unlikely
given the shortage of oil and raw materials, which
continues to limit world recovery potential. It does
give a prospect of improving tax revenues and falling
benefit expenditures.
As growth goes forward it will be possible to work out
more accurately how much of the current deficit is
‘structural’ — i.e. will not disappear with returning
growth.
For the UK the current estimate is that about 8% of
GDP is structural: still requiring a huge programme of
retrenchment.
The second point is that neither the UK nor the US has
ever formally defaulted in modern times.
Indeed for the UK, they can date this from the end of
the Napoleonic Wars when public debt reached around
300% of GDP.
The third point is the new unwillingness to use higher
inflation to bring down the debt in real value. Inflation
(implying an ‘inflation tax’ on government monetary
liabilities which thereby lose their value) is now
proscribed after the poor experiences of developed
countries during the ‘great inflation’ of the 1970s.
Electorates have rejoiced at the new inflation targeting
policies that have formally ended governments’
experiments with this form of taxation.
The electorates hated the messy and unintended
redistributions of wealth this tax implied — often from
the weak such as pensioners to the wealthy and the
unionized.
In this context bond markets have treated Mr. Obama’s
delays and the UK’s election result as simply policy
deferred.
In that they are likely to be right.
Shaw Capital Management Korea: Portfolio
Recommendations - The state of the eurozone
By contrast the situation in the euro-zone looks
increasingly difficult.
The problem is that Greece and Portugal — the two
main current problem cases — joined the euro in the
expectation that low interest rates would keep their
public finances under control.
Internally these countries have difficulty in raising
taxes and curbing expenditure but joining the EU and
then the euro gave them the authority to insist on fiscal
discipline as the ‘price’ of joining.
Now the discipline is becoming harsh and yet interest
rate premia are rising, as the risk of default increases.
Germany and the other euro-zone countries are
unwilling to transfer resources to them — and even to
provide loans on terms below these market rates.
Germany’s position in particular has hardened
massively under hostile home reactions to perceived
‘bail-out’.
Germany is simply unwilling to make transfers after
the huge costs of its integration policies for East
Germany.
There will come a point where the advantages of being
in the euro are outweighed by the disadvantages for a
country like Greece.
Once interest rate premia get high enough inside the
euro, the attraction of floating the currency down
outside it and still paying similar interest rates will
become overwhelming to governments faced with
public hostility to further sacrifice.
A large devaluation is a way of allowing the economy
to recover and produce extra revenue.
Furthermore reintroducing the local currency will
allow the government to re-denominate the debt in
that new sovereign currency … so effecting a de facto
partial default.
These exits would not spell the end of the euro. But
they will remind markets that the euro is bound
together by political convenience only and not by some
deep commitment to European integration.
Up to now there has been a general belief in such a
commitment; however, Germany’s recent actions have
destroyed this belief.
It was this belief that kept interest rate premia down
on sovereign debt of euro-zone countries; rather like
the debt of UK local authorities — formally underwritten
by the UK government, it was felt that these countries’
debt was being implicitly underwritten by other eurozone
members. No longer.
But of course what can happen to Greece could happen
to any other country. If so its risk premia too would
rise and it too would face the same trade-off between
staying in or exiting with the freedom to float at similar
interest rates outside.
Hence the chances of more break-up would get larger
and the system would become gradually closer to a
system of ‘fixed but adjustable’ exchange rates like the
old European Monetary System.
The latest developments in the government debt
markets have increased the uncertainties about
prospects for both the bond and financial markets.
However, although the pace of the global economic
recovery may be affected, there appears to be enough
momentum to enable it to continue.
We have therefore maintained the level of our exposure
to the equity markets; and we have left 10% of the funds
in the portfolio in cash deposits as a contingency
measure. Bond exposure is zero.
Shaw Capital Management Korea: Portfolio
Recommendations - The UK Hung Parliament
The bond markets are totally calm about the hung
Parliament, as they are about both UK and US bond
prospects, with yields still below 4%, in spite of the
huge deficits both countries are running.
What is going on?
The first point is that both countries are recovering,
and seem set for growth rates in the 2–3% range.
Such growth is not ‘V-shaped’ but a V was unlikely
given the shortage of oil and raw materials, which
continues to limit world recovery potential. It does
give a prospect of improving tax revenues and falling
benefit expenditures.
As growth goes forward it will be possible to work out
more accurately how much of the current deficit is
‘structural’ — i.e. will not disappear with returning
growth.
For the UK the current estimate is that about 8% of
GDP is structural: still requiring a huge programme of
retrenchment.
The second point is that neither the UK nor the US has
ever formally defaulted in modern times.
Indeed for the UK, they can date this from the end of
the Napoleonic Wars when public debt reached around
300% of GDP.
The third point is the new unwillingness to use higher
inflation to bring down the debt in real value. Inflation
(implying an ‘inflation tax’ on government monetary
liabilities which thereby lose their value) is now
proscribed after the poor experiences of developed
countries during the ‘great inflation’ of the 1970s.
Electorates have rejoiced at the new inflation targeting
policies that have formally ended governments’
experiments with this form of taxation.
The electorates hated the messy and unintended
redistributions of wealth this tax implied — often from
the weak such as pensioners to the wealthy and the
unionized.
In this context bond markets have treated Mr. Obama’s
delays and the UK’s election result as simply policy
deferred.
In that they are likely to be right.
Shaw Capital Management Korea: Portfolio
Recommendations - The state of the eurozone
By contrast the situation in the euro-zone looks
increasingly difficult.
The problem is that Greece and Portugal — the two
main current problem cases — joined the euro in the
expectation that low interest rates would keep their
public finances under control.
Internally these countries have difficulty in raising
taxes and curbing expenditure but joining the EU and
then the euro gave them the authority to insist on fiscal
discipline as the ‘price’ of joining.
Now the discipline is becoming harsh and yet interest
rate premia are rising, as the risk of default increases.
Germany and the other euro-zone countries are
unwilling to transfer resources to them — and even to
provide loans on terms below these market rates.
Germany’s position in particular has hardened
massively under hostile home reactions to perceived
‘bail-out’.
Germany is simply unwilling to make transfers after
the huge costs of its integration policies for East
Germany.
There will come a point where the advantages of being
in the euro are outweighed by the disadvantages for a
country like Greece.
Once interest rate premia get high enough inside the
euro, the attraction of floating the currency down
outside it and still paying similar interest rates will
become overwhelming to governments faced with
public hostility to further sacrifice.
A large devaluation is a way of allowing the economy
to recover and produce extra revenue.
Furthermore reintroducing the local currency will
allow the government to re-denominate the debt in
that new sovereign currency … so effecting a de facto
partial default.
These exits would not spell the end of the euro. But
they will remind markets that the euro is bound
together by political convenience only and not by some
deep commitment to European integration.
Up to now there has been a general belief in such a
commitment; however, Germany’s recent actions have
destroyed this belief.
It was this belief that kept interest rate premia down
on sovereign debt of euro-zone countries; rather like
the debt of UK local authorities — formally underwritten
by the UK government, it was felt that these countries’
debt was being implicitly underwritten by other eurozone
members. No longer.
But of course what can happen to Greece could happen
to any other country. If so its risk premia too would
rise and it too would face the same trade-off between
staying in or exiting with the freedom to float at similar
interest rates outside.
Hence the chances of more break-up would get larger
and the system would become gradually closer to a
system of ‘fixed but adjustable’ exchange rates like the
old European Monetary System.
Shaw Capital Management Korea: Financial Markets
For most of the past month sentiment in the financial
markets continued to improve.
There was further evidence that the global economic
recovery was still on track, and short-term interest
rates remained very low.
But towards month-end the mood changed after the
decision to downgrade Greek debt to “junk” status, and
to reduce the credit ratings of both Portugal and Spain.
There was a fear that the contagion would spread still
further, and that the bond market pressures resulting
from the massive fiscal deficits around the world would
have serious financial consequences.
There was always the risk that some of the measures
that were introduced to counter the recession might
have adverse consequences, and this is now proving
to be the case.
Shaw Capital Management Korea: Major Equity Markets
After moving ahead for most of the month, most of the
major equity markets are ending the period unchanged
or slightly higher, and there have been sharp falls in
many of the minor markets.
Wall Street has been the exception, and is ending
higher, encouraged by some favourable corporate
results.
But markets in Europe, including the UK, are lower,
and there have been falls in the Chinese market, and
other Asian markets, after the measures by the
authorities to reduce the risk of over-heating in the
Chinese economy.
However views about longer-term prospect are still
fairly positive, and the markets seem to be simply
pausing until some of the uncertainties have been
resolved.
Bond markets; have produced a mixed performance,
with the major markets holdings fairly steady, despite
the worsening background situation, but with the minor
markets, especially in Europe, suffering very sharp
falls, and yield spreads between the stronger and weaker
markets opening up to record levels.
The threat of sovereign debt defaults has increased
and urgent action is needed, especially in Europe, if
they are to be avoided.
However there are also warnings that similar conditions
could develop in the UK and in Japan if there are no
early moves to reduce the level of fiscal deficits.
It is still expected that an aid package will be agreed
to avoid a default on Greek debt; but this may only
provide temporary relief.
Shaw Capital Management Korea: Currencies
Movements amongst the major currencies have been
relatively small over the past month.
However the weakness of the euro has enabled both
the dollar and sterling to improve as investors have
rushed to reduce their exposure to the European
currency.
There is a fear that the debt problems affecting Greece
and other countries in the euro-zone will make it
extremely difficult to restore the credibility of the euro,
and that it might make it necessary for some countries
to leave the single currency system, at least on a
temporary basis.
Shaw Capital Management Korea: Short-Term Interest Rates
There have been no changes in short-term interest
rates in the major financial centres over the month.
The Bank of Canada though has indicated that it is
considering pushing rates higher, and this has
encouraged speculation that other central banks may
be planning similar moves.
Shaw Capital Management Korea: Commodity Markets
Moved higher over the past month as sentiment in the
financial markets improved.
markets continued to improve.
There was further evidence that the global economic
recovery was still on track, and short-term interest
rates remained very low.
But towards month-end the mood changed after the
decision to downgrade Greek debt to “junk” status, and
to reduce the credit ratings of both Portugal and Spain.
There was a fear that the contagion would spread still
further, and that the bond market pressures resulting
from the massive fiscal deficits around the world would
have serious financial consequences.
There was always the risk that some of the measures
that were introduced to counter the recession might
have adverse consequences, and this is now proving
to be the case.
Shaw Capital Management Korea: Major Equity Markets
After moving ahead for most of the month, most of the
major equity markets are ending the period unchanged
or slightly higher, and there have been sharp falls in
many of the minor markets.
Wall Street has been the exception, and is ending
higher, encouraged by some favourable corporate
results.
But markets in Europe, including the UK, are lower,
and there have been falls in the Chinese market, and
other Asian markets, after the measures by the
authorities to reduce the risk of over-heating in the
Chinese economy.
However views about longer-term prospect are still
fairly positive, and the markets seem to be simply
pausing until some of the uncertainties have been
resolved.
Bond markets; have produced a mixed performance,
with the major markets holdings fairly steady, despite
the worsening background situation, but with the minor
markets, especially in Europe, suffering very sharp
falls, and yield spreads between the stronger and weaker
markets opening up to record levels.
The threat of sovereign debt defaults has increased
and urgent action is needed, especially in Europe, if
they are to be avoided.
However there are also warnings that similar conditions
could develop in the UK and in Japan if there are no
early moves to reduce the level of fiscal deficits.
It is still expected that an aid package will be agreed
to avoid a default on Greek debt; but this may only
provide temporary relief.
Shaw Capital Management Korea: Currencies
Movements amongst the major currencies have been
relatively small over the past month.
However the weakness of the euro has enabled both
the dollar and sterling to improve as investors have
rushed to reduce their exposure to the European
currency.
There is a fear that the debt problems affecting Greece
and other countries in the euro-zone will make it
extremely difficult to restore the credibility of the euro,
and that it might make it necessary for some countries
to leave the single currency system, at least on a
temporary basis.
Shaw Capital Management Korea: Short-Term Interest Rates
There have been no changes in short-term interest
rates in the major financial centres over the month.
The Bank of Canada though has indicated that it is
considering pushing rates higher, and this has
encouraged speculation that other central banks may
be planning similar moves.
Shaw Capital Management Korea: Commodity Markets
Moved higher over the past month as sentiment in the
financial markets improved.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target
Japanese Finance Minister Naoto Kan has recently exerted pressure
on the Bank of Japan (BOJ) to act more quickly to defeat deflation,
saying he wants the falling price trend to end this year. “Two or
three years is too long. If possible, I hope that the consumer price
index turns positive by the end of this year” Kan told a parliamentary
session.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. The finance minister also said that the BOJ may have to set an
inflation target aimed at dragging the economy out of grinding
deflation … a policy where a central bank declares a target for
inflation and guides actual price levels toward that goal through
monetary policy such as interest rate changes.
BOJ Governor Masaaki Shirakawa made it clear he had no intention
of taking such a step, and explained in detail why he considers it
inappropriate. “There is a mood to reconsider the use of the
framework of inflation targeting following the recent financial
crisis," Mr. Shirakawa said at a recent news conference.
“If a central bank concentrates only on achieving a short-term
price goal, that could have an adverse effect on sustainable economic
growth, which is the final goal of monetary policy”, Shirakawa said.
Moreover, “such a mechanism would reduce the BOJ’s flexibility
on policy”.
Inflation targeting has become a favoured policy among many
central banks worldwide, but since the start of Japan’s deflationary
era in 1999, the BOJ has stoutly resisted calls to set an inflation
target against which it can be judged, and by which it can be
embarrassed if it misses it.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. Instead it has relied on softer price guidance in determining policy.
Its inflation objective is defined in the loosest terms, as a rate
between zero and 2% for the core consumer price index, as one
that meets its “understanding of medium- to long-term price
stability”, with no time-frame to achieve it and no penalty for
failure.
Still, core consumer price index, which excludes volatile fresh food
prices, fell 1.3% on year in December, dropping for the 10th straight
month.
Shirakawa’s comments suggest the central bank will not embark
on any further easing for now to put a stop to deflation. However
the BOJ might be forced to loosen policy toward the middle of the
year if the domestic economy loses momentum from its recent
strong performance … recent data showed the economy grew at a
4.6% annualized pace in the final quarter of 2009.
And with a key upper house election coming up in the summer, at
which the ruling Democratic Party of Japan hopes to win a majority
in the chamber, political pressure on the BOJ to do more to improve
the economic picture could rise.
Can the introduction of inflation targeting under deflation and
zero interest rates contribute to the Japanese economic recovery?
Generally, inflation targeting has been increasingly viewed as a
good monetary policy framework and widely applauded by
economists and policymakers.
In the literature, there are benefits of inflation targeting for both
inflation and output behaviour.
Inflation targeting should stabilise the level of inflation, reduce its
variability and persistence, and also decrease the variability of
output.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. A recent study by Daniel Leigh, an economist at the IMF, shows
that had Japan introduced an inflation target in the 90’s its
economy’s performance would have substantially improved and
the BOJ would have avoided the zero lower bound on nominal
interest rates.
But the essence of the question is to what extent the introduction
of inflation targeting will enhance credibility of the BOJ’s reflation
policy in a deflationary phase and help economic recovery.
More importantly, whether or not the BOJ monetary policy is
credible enough for inflation expectations to be anchored to an
inflation target.
Takehiro Sato of Morgan Stanley says that, unlike the Federal
Reserve, which has won a high degree of respect for its handling
of monetary policy, Japan’s central bank is not yet trusted by
markets because of its past moves. “The BOJ’s policy track record
is bad.
A target for inflation helps to anchor future expectations of
monetary policy, but BOJ lacks credibility.
The mere announcement of an inflation target would not change
expectations”, he said.
Indeed, the introduction of inflation targets among advanced
countries tends to be accompanied by an institutional framework
that makes inflation targeting credible and accountable.
In several countries, including New Zealand and Australia, inflation
targeting is an agreement between the government and the central
bank, and both are committed to policy that is consistent with the
inflation target.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. In several countries, including New Zealand and the UK, when
inflation exceeds the target by a wide margin, the Governor is
required to provide an explanation to the parliament. With
accountability and commitment, inflation targeting does become
credible.
A central bank in a deflationary environment
is subject to a time-inconsistency problem: it
cannot credibly commit to “being
irresponsible” and so continue to shoot for
high inflation.
Furthermore, there is a concern that once the Japanese economy
has emerged from a deflationary spiral and starts to recover, the
central bank will be tempted to renege on its commitment to a
high inflation target, because it would like the economy to return
to an inflation rate consistent with price stability.
Thus a central bank in a deflationary environment is subject to a
time-inconsistency problem: it cannot credibly commit to “being
irresponsible” and so continue to shoot for high inflation.
The result of the time-inconsistency problem is that the markets
would not be convinced that inflation would remain high, and
inflation expectations would not be high enough to lower real rates
sufficiently to stimulate the economy out of the deflation trap.
To overcome deflation and restore economic activity Japanese
policymakers may not need to adopt an inflation target.
They could simply use unconventional instruments, such as
purchases of riskier assets and foreign assets, more aggressively
so to persuade the markets and the public that there will be higher
inflation.
on the Bank of Japan (BOJ) to act more quickly to defeat deflation,
saying he wants the falling price trend to end this year. “Two or
three years is too long. If possible, I hope that the consumer price
index turns positive by the end of this year” Kan told a parliamentary
session.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. The finance minister also said that the BOJ may have to set an
inflation target aimed at dragging the economy out of grinding
deflation … a policy where a central bank declares a target for
inflation and guides actual price levels toward that goal through
monetary policy such as interest rate changes.
BOJ Governor Masaaki Shirakawa made it clear he had no intention
of taking such a step, and explained in detail why he considers it
inappropriate. “There is a mood to reconsider the use of the
framework of inflation targeting following the recent financial
crisis," Mr. Shirakawa said at a recent news conference.
“If a central bank concentrates only on achieving a short-term
price goal, that could have an adverse effect on sustainable economic
growth, which is the final goal of monetary policy”, Shirakawa said.
Moreover, “such a mechanism would reduce the BOJ’s flexibility
on policy”.
Inflation targeting has become a favoured policy among many
central banks worldwide, but since the start of Japan’s deflationary
era in 1999, the BOJ has stoutly resisted calls to set an inflation
target against which it can be judged, and by which it can be
embarrassed if it misses it.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. Instead it has relied on softer price guidance in determining policy.
Its inflation objective is defined in the loosest terms, as a rate
between zero and 2% for the core consumer price index, as one
that meets its “understanding of medium- to long-term price
stability”, with no time-frame to achieve it and no penalty for
failure.
Still, core consumer price index, which excludes volatile fresh food
prices, fell 1.3% on year in December, dropping for the 10th straight
month.
Shirakawa’s comments suggest the central bank will not embark
on any further easing for now to put a stop to deflation. However
the BOJ might be forced to loosen policy toward the middle of the
year if the domestic economy loses momentum from its recent
strong performance … recent data showed the economy grew at a
4.6% annualized pace in the final quarter of 2009.
And with a key upper house election coming up in the summer, at
which the ruling Democratic Party of Japan hopes to win a majority
in the chamber, political pressure on the BOJ to do more to improve
the economic picture could rise.
Can the introduction of inflation targeting under deflation and
zero interest rates contribute to the Japanese economic recovery?
Generally, inflation targeting has been increasingly viewed as a
good monetary policy framework and widely applauded by
economists and policymakers.
In the literature, there are benefits of inflation targeting for both
inflation and output behaviour.
Inflation targeting should stabilise the level of inflation, reduce its
variability and persistence, and also decrease the variability of
output.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. A recent study by Daniel Leigh, an economist at the IMF, shows
that had Japan introduced an inflation target in the 90’s its
economy’s performance would have substantially improved and
the BOJ would have avoided the zero lower bound on nominal
interest rates.
But the essence of the question is to what extent the introduction
of inflation targeting will enhance credibility of the BOJ’s reflation
policy in a deflationary phase and help economic recovery.
More importantly, whether or not the BOJ monetary policy is
credible enough for inflation expectations to be anchored to an
inflation target.
Takehiro Sato of Morgan Stanley says that, unlike the Federal
Reserve, which has won a high degree of respect for its handling
of monetary policy, Japan’s central bank is not yet trusted by
markets because of its past moves. “The BOJ’s policy track record
is bad.
A target for inflation helps to anchor future expectations of
monetary policy, but BOJ lacks credibility.
The mere announcement of an inflation target would not change
expectations”, he said.
Indeed, the introduction of inflation targets among advanced
countries tends to be accompanied by an institutional framework
that makes inflation targeting credible and accountable.
In several countries, including New Zealand and Australia, inflation
targeting is an agreement between the government and the central
bank, and both are committed to policy that is consistent with the
inflation target.
Shaw Capital Management Korea: Fresh Pressure on BOJ for Adopting an Inflation Target. In several countries, including New Zealand and the UK, when
inflation exceeds the target by a wide margin, the Governor is
required to provide an explanation to the parliament. With
accountability and commitment, inflation targeting does become
credible.
A central bank in a deflationary environment
is subject to a time-inconsistency problem: it
cannot credibly commit to “being
irresponsible” and so continue to shoot for
high inflation.
Furthermore, there is a concern that once the Japanese economy
has emerged from a deflationary spiral and starts to recover, the
central bank will be tempted to renege on its commitment to a
high inflation target, because it would like the economy to return
to an inflation rate consistent with price stability.
Thus a central bank in a deflationary environment is subject to a
time-inconsistency problem: it cannot credibly commit to “being
irresponsible” and so continue to shoot for high inflation.
The result of the time-inconsistency problem is that the markets
would not be convinced that inflation would remain high, and
inflation expectations would not be high enough to lower real rates
sufficiently to stimulate the economy out of the deflation trap.
To overcome deflation and restore economic activity Japanese
policymakers may not need to adopt an inflation target.
They could simply use unconventional instruments, such as
purchases of riskier assets and foreign assets, more aggressively
so to persuade the markets and the public that there will be higher
inflation.
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